Today I am opening my 8th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:
Let’s start off by looking at the numbers:
|Ticker||Name||Price||PE Ratio||PE Next Year||Return YTD||Sales Growth||Analyst rating||Book Value||Beta||Revenue/Share||Sales 5Y Avg Growth||EPS 5Y Avg Growth|
Revenue growth for ETSY is quickly declining to AMZN’s levels despite being much smaller:
Here are the Google trends charts:
credit: Google Trends
How is it that Etsy, the much smaller player in a fast growing ecommerce sector isn’t growing much faster than AMZN? To me that is a tremendous warning sign.
Long Amazon (AMZN)
A few days ago I published a lengthy post about why I think despite its difficult valuation, AMZN is a must hold. I do recognize it will have its share of volatility, especially in shorter term periods but I think it’s a guaranteed (or as close to it as you can get) long term winner, you can read the full post here
Next earnings: April 27th
Short Etsy Inc (ETSY)
I just closed a trade on ETSY after very disappointing earnings for Q4. I continue to be highly skeptical of ETSY’s current valuations, I don’t think it will be able to compete with the likes of AMZN and while it targets a different customer segment in many ways, AMZN has a tremendous effect on ecommerce in general putting high standards in terms of shipping, ecommerce, etc. That is putting pressure on smaller retailers like ETSY and I don’t think it can live up to its current valuation.
Next earnings: May 2nd 2016